Successfully managing healthcare culture is crucial in a merger and acquisition (M&A) and is a pivotal moment for an organization promising growth and innovation. However, when organizations merge, differing cultures will inevitably arise. The challenges posed by cultural misalignment during an M&A are significant and must not be overlooked.
Shockingly, studies reveal that 70% to 90% failure rate for organizations undergoing an M&A. This is most often due to poorly integrated cultures, even with a strong initial culture. Neglecting to purposefully shape merging cultures increases the likelihood of M&A failure. A neglected culture leads to integration challenges, detrimental communication gaps, conflicts, low morale, and resistance to new initiatives – including IT efforts.
It’s imperative for organizations to seriously consider their approach to blending cultures. Managing cultures during an M&A requires a comprehensive and strategic approach that goes beyond the financial aspects of the transaction. Prioritizing culture and recognizing its significant impact on organizational success, especially during and post-M&A, allows healthcare organizations to create a thriving environment that leverages the strengths of each culture and embraces a shared vision of the future.
Understanding Culture
At its core, culture encompasses an organization’s shared values, behaviors, mind-set, and management practices that influence how work gets done. It shapes the unique identity of each organization, acting as its lifeblood and fostering employee happiness and loyalty.
On an individual level, culture manifests through personal values like trust, drive, and commitment to the organization, colleagues, and leadership. At a team level, it defines performance, effectiveness, and engagement, while on an organizational level, it aligns teams into a cohesive whole. This cohesive culture also shapes the external perceptions of your organization. If merged cultures begin experiencing friction at any level, teams can impede work and jeopardize the overall M&A success.
How to Approach Merging Cultures
Evaluate Cultures and Their Compatibility
Before embarking on a merger or acquisition, healthcare organizations must prepare for a cultural assessment. Leaders should execute this cultural assessment as early as possible. This assessment allows the organization to comprehensively understand both their own and the new culture. Ultimately, the goal is to evaluate the compatibility of the merging cultures.
Tactics like organizational research, management interviews, employee surveys, and site visits are a few ways to accurately evaluate cultures. To approach the assessment, establish a set of criteria to consider. These can include:
- Core values
- Work processes
- Management practices
- Decision making practices
- Employee incentives
- Team and employee accountability
The assessment aims to create a holistic cultural view based on facts, not leadership hunches.
Conducting a cultural assessment not only enhances cultural understanding but also identifies similarities, opportunities, and challenges. Organizations should adapt, compromise, or even adopt aspects based on the results by identifying beneficial cultural components for the desired culture.
After completing a thorough culture assessment, engage in understanding the results and discuss it’s meaning. Clarify the organization’s approach for creating a unified culture. Choose what factors from each culture to keep and create strategies for how to dissolve the weaknesses. Develop a framework to facilitate the merging of cultures, enabling them to move forward together.
Create a Cultural Framework
Once you understand the cultures, focus on intently building a cultural framework that shapes the new target culture. This begins by analyzing the results of the recent cultural assessment. What behaviors, mind-sets, and management practices were found that will strengthen your new desired culture? These will be the attributes to develop and adopt.
This framework should be a structured plan with specific actions, goals, and priorities to achieve the desired, healthy, and high-performing culture. Include initiatives like cultural trainings and cross-cultural engagements. Incorporate cultural artifacts, such as new values and mission statements, as foundations encouraging a new cultural path.
Culture is firstly driven by organizational leaders. When possible, involve organizational leaders in the development and alignment of the new cultural plan before the M&A begins. Aligned leaders can begin serving as role models by embodying the desired behaviors, storytelling, and rewarding new cultural norms. Leaders are those who employees will look to for transparent communication and guidance, therefore becoming crucial pieces to a smooth transition.
Key to these efforts is early tracking of the changing cultural climate to address issues promptly. It’s important to anticipate any potential cultural clashes or negative reactions from teams or individual employees. Having a plan for how to handle different scenarios elegantly will be helpful as well for efficient resolutions.
Remember, creating a new culture will take time. Don’t let your organization lose focus on the culture during or after the M&A. The executive team should continuously support and assess the culture, making actionable improvements as needed.
Prepare Employees
Properly preparing employees is key to a successful culture merge and overall M&A. Stay ahead of employee concerns through direct and consistent communication. Leaders must inform employees about the upcoming M&A and ensure they understand the transition process.
Plan a communication strategy to avoid rumors and anxiety among employees. Keep them consistently informed and encourage participation in cross-functional initiatives to better know and understand their peers.
Addressing employee concerns, especially around job security, is vital for maintaining morale and a healthy functioning team. Are they going to lose their role? Will they get along well with the new teams? Be prepared to face these worries. Don’t forget to also explain the benefits they’ll experience through the M&A as well.
Implementing these communication and engagement initiatives will ease employee anxieties while also enabling them to hold trust in their leaders. Leaders should also collect employee feedback during and after the M&A to make continuous cultural improvements and ensure employee voices are heard.
An open dialogue between leaders of both organizations should also be maintained. This avoids silos while also allowing leaders of both organizations to align on M&A progress, new cultural values, and management practices.
It’s important to recognize the difficulty employees may face in adopting a new cultural mindset. Conducting onboarding for newly acquired employes is helpful for establishing new expectations and making them feel a part of the new team.
An M&As most overlooked factor? The culture.
Neglecting culture could cost you everything.
We won’t let yours fall behind.
